Correlation Between Colony Bankcorp and Meta Financial
Can any of the company-specific risk be diversified away by investing in both Colony Bankcorp and Meta Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Colony Bankcorp and Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colony Bankcorp and Meta Financial Group, you can compare the effects of market volatilities on Colony Bankcorp and Meta Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Colony Bankcorp with a short position of Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colony Bankcorp and Meta Financial.
Diversification Opportunities for Colony Bankcorp and Meta Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Colony and Meta is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Colony Bankcorp and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group and Colony Bankcorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Colony Bankcorp are associated (or correlated) with Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of Colony Bankcorp i.e., Colony Bankcorp and Meta Financial go up and down completely randomly.
Pair Corralation between Colony Bankcorp and Meta Financial
Given the investment horizon of 90 days Colony Bankcorp is expected to generate 1.23 times less return on investment than Meta Financial. But when comparing it to its historical volatility, Colony Bankcorp is 1.06 times less risky than Meta Financial. It trades about 0.14 of its potential returns per unit of risk. Meta Financial Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 6,819 in Meta Financial Group on August 31, 2024 and sell it today you would earn a total of 1,627 from holding Meta Financial Group or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colony Bankcorp vs. Meta Financial Group
Performance |
| Timeline |
| Colony Bankcorp |
| Meta Financial Group |
Colony Bankcorp and Meta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colony Bankcorp and Meta Financial
The main advantage of trading using opposite Colony Bankcorp and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colony Bankcorp position performs unexpectedly, Meta Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Meta Financial will offset losses from the drop in Meta Financial's long position.| Colony Bankcorp vs. Home Federal Bancorp | Colony Bankcorp vs. First Financial Northwest | Colony Bankcorp vs. First Northwest Bancorp | Colony Bankcorp vs. First Capital |
| Meta Financial vs. Capitol Federal Financial | Meta Financial vs. Colony Bankcorp | Meta Financial vs. First Mid Illinois | Meta Financial vs. Meridian Bank |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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